By Michael MacDonald
HALIFAX — The idled NewPage paper mill in Cape Breton has been tentatively sold to a company in British Columbia that intends to restart one of its two paper machines, but the sale won’t be approved until certain conditions are met.
Ernst & Young, the court-appointed monitor overseeing the sale, announced Wednesday that Pacific West Commercial Corp. had edged out three other bidders.
Pacific West is associated with Stern Partners Inc., a Vancouver investment firm that also owns Alberta Newsprint Co. of Whitecourt, Alta., and Westland Paper Co., an Oregon-based mill.
Ernst & Young said it was uncertain when the sale may be finalized and it did not disclose the value of Pacific West’s bid. However, it confirmed that NewPage will return to court Jan. 18 to request an extension to the sale process and protection from creditors to March 30.
The money-losing mill in Point Tupper was shut down in September, throwing 600 employees out of work, and affecting another 400 forest contractors.
Ohio-based NewPage has said the mill was losing about $4 million a month as it struggled with soaring electricity and shipping costs, a strong Canadian dollar and declining demand, particularly for newsprint.
Stern Partners president Ron Stern confirmed the mill’s newsprint machine will be left idle if the sale is approved. But he said its supercalendered machine will continue making glossy paper for magazines and catalogues.
He wouldn’t comment on the impact on jobs, wages or benefits, but he stressed that the mill will maintain a “substantial” number of positions.
Stern also said his company would not assume the unfunded liability associated with the existing pension plan, which he said is in excess of $100 million.
“I understand that it’s a big issue for the people affected,” he said in an interview from Vancouver. “We’re doing a lot of work to position this (mill) as a low-cost producer ... If you were to step into that liability, you wouldn’t have any hope of achieving that.”
He wouldn’t comment on whether the pension would need to be wound up.
As for electricity rates, Stern said the company is looking for significant cost savings.
“It is the biggest cost of the operation,” he said.
Still, Stern said he doesn’t want to saddle Nova Scotians with higher electricity bills.
Charlie Parker, the province’s natural resources minister, said Pacific West will enter into further negotiations with the provincial government, the province’s electric utility and the union representing mill workers.
“Our government is very pleased that the successful bidder is one that is looking to keep the mill operating in a sustainable way and will help maintain hundreds of jobs in rural Nova Scotia,” he told a news conference.